Review of 2015 Annual Results of Listed Chinese Insurance Companies

The Chinese insurance industry recorded rapid growth in 2015 with the listed insurance companies reporting impressive financial results. This report reviews the performance of PICC, China Life, Ping An Insurance, CPIC, China Taiping, New China Life and China Re in 2015 with a focus on:

a. Life insurance
b. Property & casualty insurance
c. Investment returns
d. Solvency
e. Deloitte solutions

• In 2015, the seven companies in aggregate made up more than half of the insurance market share. Listed insurance companies' gross premiums amounted to RMB 1,570.5bn, an increase of 12.1% year-on-year. Gross premiums of property and casualty insurance and life insurance (including health and pension insurance) of these listed insurers amounted to RMB 588.0bn and RMB 982.5bn, respectively, representing increases of 11.5% and 13.2% on a year-on-year basis.
• In 2015, the seven companies reported an aggregate net profit of RMB 169.2bn, representing an increase of 34.1% compared to the previous year. The net profits of listed property and casualty insurance companies amounted to RMB 44.2bn while life insurance companies reached RMB 82.5 bn, representing increases of 55.1% and 20.8%, respectively, year-on-year.
• As at 31 December 2015, total assets of listed insurance companies increased by 14.8% and amounted to RMB 10,379.2bn; among which investment assets increased by 12.0% and amounted to RMB 8,035.9bn. Despite the volatility within capital markets in 2015, listed insurance companies seized the investment opportunities arising from bull market runs in debt and equity investments and accomplished an investment return of 6.03% and a comprehensive investment return (which included unrealized investment gains of AFS) of 7.31%, representing an increase of 143bp and 51bp, respectively.
• Having benefited from strong investment returns, the net profits of listed insurance companies increased significantly. However the underwriting profits of listed P&C insurers only recorded a slight increase of 0.4%; surrenders of listed life insurers reached RMB 271.1bn (increased by 8.25%), with a lapse ratio standing at 6%. Growth of reinsurance, especially P&C reinsurance, lagged behind that of direct insurance business. These developments warrant further attention in the future.